Holiday season! Insurance tips for overseas trips

19 December 2018

With a record number of Kiwis now travelling overseas – New Zealanders took 2.9 million overseas trips in 2017 – having, and understanding, travel insurance is a must.

“Overseas travel has changed dramatically in the 20 years I’ve been in this job,” says Insurance & Financial Services Ombudsman, Karen Stevens. “What hasn’t changed is the steady number of travel insurance complaints we receive. Things go wrong. Travel plans are frequently disrupted by unexpected events, and that is what travel insurance is for – to cover you for the unexpected.”

“We’d encourage all overseas travellers to have travel insurance, and to understand it,” says Karen. “While insurance can now be purchased online, via an agent, or as a credit card perk, it’s important to get hold of the policy and check your cover and your obligations – for example, you need to take care of your belongings and you need to report incidents immediately. When you apply for the insurance, you need to tell your insurer about any pre-existing health condition you know about and, if they accept it, pay an extra premium for it.”

Complaints about pre-existing conditions are the most common among travel insurance complaints. “Last year, the IFSO Scheme received 46 complaints about travel insurance (14% of all complaints), and 220 complaint enquiries. Unfortunately, many of them could have been avoided,” says Karen.

“We hope the following tips help future travellers avoid the disappointment of a declined claim.”

1. Purchase travel insurance as soon as possible

Ideally, insurance should be arranged when you book and pay for tickets; to ensure you get cancellation cover should anything unexpected go wrong at home or at your destination. If you buy insurance after travel warnings have been issued about an imminent disaster at your destination (e.g. an erupting volcano), cancellation is unlikely to be covered. Contact your insurer before you depart and see:

Mt Ruang eruption and ash cloud; no cover for cancellation
In March 2015, Mr B arranged flights to Bali (12-17 July); he purchased travel insurance on 8 July. When Mr B’s flights were cancelled due to the Mr Ruang ash cloud, he made a claim for his flight costs: $1,792.20. It was declined, as there was no cover for claims related to Mt Ruang for policies purchased after 2 July, as it was no longer an “unexpected event”. Mr B said it was unexpected, but it had been in the media, and on the airline and insurer’s website travel advisories.
See the full case study

2. Check and understand your policy

Travel insurance is often purchased online, through an agent, or as a credit card perk. Get a copy of your policy and read it. Take note of exclusions and limitations. People are often caught out by time limits or age restrictions on credit card insurance; monetary limits for valuable items; and exclusions such as pre-existing conditions.

Swiss watch stolen in Spain; travel exceeded 90-day limit on credit card
Mr F’s Tag Heuer Classic watch was stolen in Spain, on day 57 of his 100-day trip. Mr F’s credit card entitled him to automatic travel, subject to terms and conditions of the policy. The policy specified that, to be eligible for cover, the total period of overseas travel must not exceed 90 days. Mr F argued that day 57 is within 90 days, but the total period of his travel exceeded 90 days. He did not meet the activation requirements of the policy. See the full case study

The missing bag and the rotting meat; check policy exclusions, don’t pack perishables
Ms A’s trip to the USA went awry, and her bag went awol. In the bag was vacuum packed chilled meat - a gift for a Ms A’s friend in the USA. The bag was sent back to New Zealand, and “rotting” meat was discovered, which had contaminated the bag’s contents. When Ms A returned home, she made a claim, which was declined. The damage was caused by “leakage” of fluid from the rotting meat, which was excluded under the policy. See the full case study

3. Tell your insurer about pre-existing conditions

“Pre-existing conditions” are health conditions or symptoms that exist before you travel (e.g. you might know you have a sore knee, but not have a diagnosed condition, which will be a pre-existing condition and not covered). They will usually be excluded from cover, unless the insurer has accepted them in writing and charged an extra premium. When arranging insurance, disclose all health conditions and symptoms you’re aware of. They include conditions which arise after you purchase insurance, but before you travel.

Mr M’s trip to NZ ends in tragedy; pre-existing condition exclusions apply even if indirectly related
On a trip to New Zealand to visit his son Richard*, Mr M was admitted to hospital with a heart attack, and later died. Richard made a claim for the cost of hospitalisation, which was declined because the insurer believed Mr M’s hypertension and diabetes were indirectly related to the heart attack. As the medical evidence suggested Mr M’s diabetes contributed to Mr M’s death, the insurer was entitled to decline the claim. See the full case study

4. Take care of yourself and your belongings

Leaving bags “unattended in a public place”, including airports, stations, hotel foyers and beaches, is a common exclusion. You are required to take “reasonable care”, be vigilant and adhere to warnings. This includes wearing jewellery “on your person” or locking it (and other valuables) in a safe; and packing electronics and other valuables as carry-on luggage, not checked-in, on flights.

$13K designer bag disappears at Zurich station; don’t leave your bags in public places, even briefly
En route to Milan, Mr X stopped at the Zurich train station. He left his designer bag (containing about $13,000 worth of clothes, accessories and electronics) on the ground and walked 6-7 meters to throw his rubbish in a bin. He was gone for approximately 15 seconds. When he returned, his bag was gone. His claim was declined as leaving bags “unattended in a public place” was excluded under the policy.
See the full case study

5. Report incidents immediately

Report lost or stolen items to police immediately as you are required to prove your loss. Your policy will provide specific timeframes for reporting (ie 24 hours), and details of a free 24-hour helpline for emergency medical and travel assistance service. Check it out before you go.

Melbourne shopping and the antique necklace
Out shopping in Melbourne, Mrs K lost her antique necklace. Rather than go to the police, Mrs K returned home and wrote to two of the shops she’d been to, asking if they’d seen it. She then obtained a loss estimate from a jeweller (of $3,175) and made a claim. Her claim was declined, as the loss hadn’t been reported within 24 hours as required. Later, the insurer accepted the letters as proof of an “unexpected event” and made a goodwill payment of $900. See the full case study

*Not real names